Beyond Enemies

Despite the title, this article at WorldChanging (Working With the Enemy) certainly gets it. If we want global action against climate change, it is going to be companies who will deliver it. For as much good as all the lobbying groups and NGOs do, most only press others into action. It is going to take the financial might of Home Depot, Wal-Mart, etc. to bring about real change.

If environmentalists see corporations as the enemy, the battle is already lost. If corporations are an ally, there is no battle at all. There is cooperation.

Got Financial Innovation?

Gristmill hits the nail right on the head when they say "the next few significant developments in the solar field are going to be in the field of financial rather than technical innovation."

Let's take a look at what sorts of financial innovation are needed to advance clean energy. I've already discussed green mortgages and subsidies. But what about other more subtle innovations? I predict there is money to be made in the trading of solar exploitation rights. Perhaps you can sell the right to develop your rooftop, even if you don't want to buy the solar power yourself. Or weather futures as a financial instrument to reduce the risk of cloudy days.

There is no limit to the number of new financial tools that could be developed to further green energy development.

Tracks converging

Warren Buffet is on rails. The storied investor is buying up 15% of Burlington Northern Santa Fe, even though:
"U.S. freight shipments down 3.5% in the first eight months of the year, and intermodal traffic down 1.9%. Fewer housing starts have shrunk lumber shipments, and shipments of most commodities, motor vehicles and equipment are down."

While railroads are very efficient, and I'd love to see them used more, it does matter what they are carrying. The article talks about another railroad deal where the "gem in the deal was DM&E's rights to develop in the coal deposits of Wyoming's Powder River Basin." Being really efficient at bringing more coal out isn't really the best thing.

Get rich on poverty

An article on WorldWatch says that homes in India are being powered for a few hours each day on solar instead of kerosene.

"local and national banks to finance small loans—usually $300 to $500—for a system that typically contains a roof-installed solar PV module, storage battery, charge controller, interior wiring, and switches and fixtures with the capacity to power two-to-four low-watt compact fluorescent lamps (CFLs) and a DC fan."

Right now this seems to be a humanitarian mission costing a reported 1.5 million dollars. Maybe a savvy reader will find a way to fuse all the elements of this plan -- micro-lending, solar manufacture, infrastructure construction -- into a viable business plan.

This isn't a get-rich-quick scheme, but think about the scale: ~450 million people (1.5x the United States) suffer through grid outages daily. Millions more have no access to the grid access whatsoever. That is a vast market, and an even more awesome opportunity to help.

10 million AA batteries

There has been a lot of press about the UK power company EON's plans to create a giant battery? The two questions that come to my mind are: is it green, and does it make economic sense?

Batteries are not all that green. They have all sorts of nasty chemicals and their ability to store a charge slowly decreases with time. They are also expensive. It will be interesting to see how this plan can compete with hydrogen or compressed air as energy storage.

Start a green business

My new friends over at LivePaths have an article about potential green businesses. Many of them featured are small time ideas right now, like recycling licence plates and making your own biodiesel. But that's what you are here for. Take these ideas and run with them.

NIMBY goes out with the tides

The Energy Blog has a story about the AquaByOy 2.0, an experimental tidal power generator recently deployed off the coast of Oregon. It is not generating power right now, but collecting data that will be used to create a 250 kW test unit.

The article says that:
"A cluster of AquaBuOYs would have a low silhouette in the water. Located several miles offshore, the power plant arrays would be visible to allow for safe navigation and no more noticeable than a small fleet of fishing boats."

Safe, quiet, and unobtrusive. Should not be any not-in-my-back-yard (NIMBY) problems with these. Can something this appealing be made inland?

Breaking the Builder Conumdrum

A common problem in the market for energy efficient homes is paying for the added cost. This problem stems from different incentives for builders and home-buyers. Today, the incentive for builders is to build a big house cheaply. That way, when the real estate agent runs the "comps" Sally Shoddy's constructions look cheaper than Ernie Efficient's.

There is two ways around this. First, use more imagination. For example, if you use high quality windows and insulation, do you need as large a furnace? The Rocky Mountain Institute doesn't think so. Their building in Snowmass, CO has no furnace whatsoever.

But even if you can't get that cost down, you can use a green mortgage highlighted in today's Wall Street Journal. I predict this product will catch on in coming years. The lender rolls the price of the energy efficiencies into the mortgage.
""We liked the house but wouldn't have been able to afford to fix it up," Ms. Craig says. She says the cost of improvements adds an extra $100 to their monthly mortgage costs, but they save an estimated $2,000 a year on energy bills."

What happens is the bank considers that $2000 per year as additional income. With the subprime fallout, this will be a way to make yourself more credit-worthy to banks. So everybody wins - you get that green house and the bank qualifies you for a bigger mortgage.

And the builders?
"
The products are also available for new construction. Homes that are already energy-efficient can be audited and the amount that is predicted to be saved on utility bills is counted as extra income for the home buyer.
"
The builders can differentiate their offering from Sally Shoddy's by being able to offer this product.

Score one for distributed power

Treehugger reports and B&Q in the UK is putting up a 2MW wind turbine at their Nottinghamshire distribution center. The article was light on financial details, which left me wondering if this was a publicity stunt or a bone fide investment. Either way, I like the move toward distributed power. The blessing and curse of methods like wind and solar is that they are granular. That is, you can have a small amount of it. This is a great example of industry capitalizing on the granularity of this power source.

The Myth of Peak Energy

The Oil Drum published a long report on "global peak energy." There is lots of insightful research, including the unflinching correlation between population growth and energy use. Ultimately, it reaches the Malthusian conclusion that global energy and with it population will peak between 2025 and 2030.

The notion of peak energy seems to piggy back on the notion of peak oil. But there is a very good, physical reason for peak oil - there is only so much of it, and it can only come out of the ground so fast. Peak energy, however, is a meaningless term. Energy can come from anywhere. If there was going to be a global shortage of energy there would be a short run crisis, but enterprising citizens/companies would step up by building solar/wind/tidal/thermal/etc power plants. As the cost of energy increases, more and more sources of that energy start to look appealing.

The one thing people know how to do is reproduce. In the absence of cataclysm, they will continue to do so.

The Nuclear unLearning Curve

Bloomberg (via Gristmill) writes about the troubled construction of a nuclear plant in Finland.
"
One Areva official points to a nagging issue for reactor builders: inexperienced contractors working for an industry that has been dormant in much of Europe and the U.S. for 20 years.
"
Business types out there will be familiar with the learning curve. Essentially, every time total production is doubled, costs come down some percentage. So if you made 1000 units at $10 average cost, when you made 2000 units, the cost should be down to $8 on a 20% learning curve.

But this comment speaks to a forgetting curve. So few nuclear plants have been built that delays and problems (like lumpy concrete and problematic steel grain sizes) have run up the cost until it is "more than 25 percent over its 3 billion-euro ($4 billion) budget."

Building a new nuclear reactor takes years. If you believe in nuclear, can we build enough reactors (and deal with the waste) to make a difference?

More advice for eco-preneurs

A story in Gristmill makes a good follow-up to yesterday's company profile. I said that anyone hoping to create a new product in the that caters to the green crowd needs to make it cheap. Gristmill says:
"It's worth remembering that for those not schooled in the minutiae of climate, it is genuinely hard to figure out how to make a meaningful individual contribution, especially since most people are already overwhelmed with the workaday obligations"

In other words, make it easy too.

This is not groudbreaking, but for those of us who make an effort to "go green" it is easy to forget that the vast majority of people have no energy for such an effort.

"Better, easier, cheaper" is the mantra for all products. It is time that green products live up to that same standard. Products like the Windspire (via Treehugger) might be cool, but they are not what we should be striving toward.

Company Profile: Feuz

Treehugger has an article on a new recycling company called Feuz. Feuz blends concrete with products such as recycled glass. The results are, to my eye, impressive. I find concrete ugly and the (glossy marketing) pictures on the Feuz website were appealing.

There is no word on the price of these products. I would be surprised if Feuz can compete on price. Maybe in the high priced items like countertops with Feuz stone. But that makes Feuz another green/glamor product.

Of course, it is easy to be green if price is not an object. To all you eco-preneurs out there, bring the price down. If you make it cheap and easy to be green, the world will drive their SUVs to your door.

More on off-shore wind

Treehugger makes the argument for off-shore wind. I've talked before about off-shore wind and Treehugger capture the essence of the argument perfectly.
"Most campaigns against turbines are based around the noise and the visual impact, and these have been reduced by going offshore. It is more expensive to do it here than to do it on land"

I could campaign against coal saying that it is dirty, polluting, and kills (depending on how you calculate it) perhaps several and perhaps dozens of people each year. But somehow coal remains cheap and wind power is forced to be expensive by going off-shore.

Fox news is not journalism

I almost didn't write this article because I didn't want to spread their misinformation any further. Fox news has a story about carbon footprint. While this article is from May 2006 the author of the aptly titled "Junk Science" column has an entire range of these. Up front I will admit that buried deep down in there, there is a nugget of truth. But you have to peel back layers of misleading statements to get there. Let's examine it.

"The notion of a personal 'carbon footprint' was created by global warming alarmists to foster a sense of individual accountability [for using fossil fuels]."
In the very first sentence we learn that getting people to take individual accountability for their actions is "alarmist." I argue that individual accountability is an ideal to be worked towards.

The meat of the article says that using carbon offsets to prevent 1 degree F of global warming (whatever that means) would cost between 7 and 38 trillion dollars. The author seems completely unconcerned with global warming (and scanning the other articles in this series confirms this) and does not suggest an alternative to offsets.

First, there are few things in this world that scale in a perfect line forever. If carbon offsets were the only tool that so-called alarmists had to fight global warming, there is no reason that it wouldn't follow a learning curve just like every other industry. The more that are made, and the greater the scale, the cheaper they become. At the point where 7 trillion dollars would have been spent on them, a carbon offset would be negligibly cheap. (As a side note, if we in the US spent the 1-2 trillion dollars of the war effort on carbon offsets we'd be quite far down that curve already).

Second, offsets are not the only tool available. They are not even a primary tool. Even if we agree that offsets are too expensive a tool to use on a large scale, all that means is that we need to use another tool. Let's try conservation for starters.

At the end of the article the author mentions in passing that, as a by-product of creating their web-based carbon footprint calculator, they calculated what it takes to prevent 1C of global warming (notice he switched to C suddenly, from F). "no manmade CO2 emissions for 120 years."

This type of discovery isn't the sort that is made as a by-product of a web page. I would be surprised if this sort of statement could be made without vast amounts of climate data and computing power.

Since that is clearly not an option, what can be done? In a fair and balanced treatment of the issue, this might be discussed. Instead, the carbon offsets industry is set-up and knocked down with misleading arguments and environmentalists labeled "alarmist."

Carbon sequestration and the true cost of everything

The Gristmill provides the couterpoint to my earlier article about using waste efficiently. In the words of big coal insider Richard Coutrney "everybody knows cs [carbon sequestration] would be too expensive." Let's examine why this should be.

First, we'll start by breaking down the total cost. Off the top of my head, I can come up with something like this:
True Cost = Manufacturing Cost + Environmental Cost + Social Cost

I'm calling the manufacturing cost how much money it takes to turn raw materials into a product. The environmental cost is how much it costs to clean up the damage to the environment. And the social cost is a catch-all for items such as health, inconvenience, etc. All the deaths coal causes each year from pollution, black lung, and so on would be a social cost.

The only thing reflected in the price of coal-fired electricity (or any other good) is the manufacturing cost. In this case, the cost of the coal, plant, and employees. Adding in the cost of carbon sequestration forces some of the other environmental and social costs into the price of the electricity. The price/kWh will increase because more of the true cost is being paid by the consumer.

Compare this to clean energies like wind and solar. The environmental and social costs are much lower in those cases but the manufacturing cost is higher. If the manufacturing cost is all that matters (which is the case right now) these are not attractive alternatives. If we as consumers were somehow forced to bare the total cost, things might look different.

This has been done before. When SO2 was being cracked down on, scrubbers were installed in smokestacks. In the final analysis, this was a relatively cheap operation. But the threat (acid rain) was great enough that consumers were willing to pay the extra fraction of the true cost.

Carbon sequestration is a losing strategy because it coal is a process with a large true cost. Efficiency, like that demonstrated in the Ford example, is more appealing as the true cost is lower to begin with. The trick is making this point obvious.

Brita and Nalgene - Fighting Waste

Brita and Nalgene have teamed up for a Filter for Good campaign against bottled water. They claim that last year Americans threw away $1 billion worth of plastic bottles, including 1.5 million barrels of oil for manufacture.

Bottled water in the western world is a monument to waste. 30 years ago, people found the idea of bottling water risible. How many marketing dollars did it take to turn that around? Resist the hype and run your own blind taste test: two bottles of water and 2 samples of tap water. You might be surprised at the results.

Of course Brita and Nalgene will benefit if people drink less bottled water. Is this part of a greater rebranding effort? What other business can be spun as in the 'waste fighting' business?

Running on fumes

Ford announced that they will build a 300 kW fuel cell that runs on paint fumes. This is a brilliant example of increased business efficiency coupled with increased energy efficiency. Any waste is money out of your pocket. While Mr. Khosla might regard this as a toy, I say that if this level of zero-waste thinking gets rolling it will start to add up. What else can be run on waste?

Buying Power

I've written before about the economics of solar and argued that subsidies need to be put into place to make alternative energies competitive with other investments. Forbes has an article about companies like Wal-Mart and Whole Foods putting a similar scheme into practice. With a combination of financing and subsidies, these companies are making solar pay.